Alexandru Nicolcioiu: The story of those who founded the refinery
As we have announced, this year Petromidia is celebrating 40 years of production. On this occasion, we present to you certain pages of history lived by those people whose life is indissolubly related to the large seaside refinery. Today, we have a little background on the collection of memories with Alexandru Nicolcioiu, the key person within the Refinery, who can boast of having lived close to Petromidia since this refinery was at the stage of an idea, a decade before the first production plant started up. For his entire career, Alexandru Nicolcioiu will receive the title of “Honorary Citizen” of Năvodari City tomorrow.
If we were to divide, in terms of literature, the years of existence of Petromidia, we could assert that it had known three different periods: a Romantic period, a Dark time and a Reinvention period. The Romantic period started at the end of the 1960’s, when only reed springing out of the marshy ground mixed with sand spread as far as the eye could see on the spit of land separating the Năvodari Lake and the Black Sea coast. Where we see Petromidia Refinery today and even close to its fence, many star hotels and neighborhoods of villas and high residential buildings, at that time, across many miles of land, it was only the sea breeze which was moving the weeds growing up at leisure and only seagulls, also rare, were bothering the middle of nowhere with their loud screams.
Memories from the Romantic Period
Alexandru Nicolcioiu was an enthusiastic high school student when he first heard that a large petrochemical plant was going to be erected at the Seaside. The location where it was intended to be built was not exactly known, however, it was known that it would be erected and, as it was the custom of that time, that young adults returned home after graduating college, he thought that the respective refinery could be an opportunity for himself.
“I had known about the construction of a refinery in Constanţa County since 1968, when I was in high school, in the 10th grade. A group of professors from the Petroleum, Gas and Geology Institute of Bucharest came, who, normally, promoted the respective faculty, and hence, they explained to us what crude oil processing means. As I was from Dobrudja, I relied on the respective information. My intent was to remain in Constanţa, as we were taught to return to our place of birth, by assignment. That is why I focused on the job in Petrochemistry, Chemistry, Mathematics, Physics disciplines. I had been thinking of going to this college ever since. In 1970 I became a student at the University of Petroleum, Gas and Geology of Bucharest, the Faculty of Petroleum Engineering and Chemicalization”, the engineer who was going to manage the destiny of Petromidia later, for a dozen years, related with nostalgia in his eyes.
How the location of the refinery was chosen
However, nobody knew exactly for years where the famous refinery would be built. “Approximately 37 sites had been proposed to this end, until the last site was decided. Sites in Cernavodă, in Cumpăna, in Valul lui Traian, in Năvodari behind the former Chemical Works USAS – Works of sulphates and sulphuric acids of Năvodari had been proposed. Many places..." Alexandru Nicolcioiu remembers.
However, each of the possible sites was given up one by one, for reasons that were prevailing at the time when the former dictator Nicolae Ceauşescu was ruling the country. “It could be seen that behind the Năvodari chemical works there was agricultural land, as it was the time when maize looked very good", my interlocutor says, reminding of the dictator’s obsession about the “yield per hectare”. Finally, communist leaders flew over the Seaside to choose the site for Petromidia.
“The then president of Romania asked the specialists whether the works might be located in the swamp in the neighborhood of Năvodari, between the lake and the sea. Technical calculations were made, as well as technological calculations and finally, it was decided that the final location of this petrochemical plant should be here, in this area. Therefore, in November 1975 Decree 363 was issued, deciding that the investment in Midia-Năvodari Petrochemical Plant should be initiated", Nicolcioiu remembers.
Moreover, he immediately emphasizes proudly: “In conclusion, I have been an oilman within Năvodari Petrochemical Plant" - with my heart, obviously – “since I was in the 10th grade, namely, since 1968. When Petromidia was only at the stage of an idea and more than 10 years before it had been effectively started up".
Years during which he learned about what a refinery means
After having finished his studies in Bucharest, he followed his dream that he had made since high school. “In 1975, I had an assignment to Năvodari Petrochemical Plant, as it was called at that time, but the first two years and a half we went to have our training in a refinery which was operating during that period, namely between 1975 and 1978, to the refinery located in Piteşti".
An experience about which he says that it was useful for him, as being fresh out of university, he had no idea how to work with people.
“Since the first day of my internship, as people working in that refinery were in the stage of starting up the new plants, they gave me the position of team leader working in shift. That two and a half-year period helped me a lot, as I succeeded in learning how to manage, how to work with people, as I was in charge of 20 workers, working in shift. I learned how a technological process was managed, I learned how to act in critical situations likely to occur at any time, and actually, I can say that after I finished my internship period, I was more or less knowledgeable about how a refinery was started up and operated", my interlocutor adds.
The first badge
For the first time he set foot as an employee, in Năvodari Petrochemical Plant on 1 April 1978. Even if the building of the Plant had already started for 3 years, it had not been done much, and there were few employees. “On the platform, in 1978, there were more builders working to erect the plants than refiners. On my badge issued on 1 April 1978, it was written that I was the employee identified with number 361. At present, among employees with more than 40-year seniority, I think that we have remained 55, spread out over the entire Midia platform”, he says again, nostalgically.
Because the marshy spit of land between the lake and the seashore was too small for such works, dozens of hectares of land were pulled out from Sea. And concerning life, during those years of pioneering, was a classical lifestyle lived on the construction site: in summer, we baked in the sun and stewed in our juice in the barracks made of iron plates pierced in certain places, and in winter, the seawater blown apart by the wind created icicles on eyebrows, moustaches and on our clothes.
In 1978, they had started to build the container fleet, the connecting pipes between Midia and the current Oil Terminal, and the DA installation, which was started up thereafter, on 29 June 1979, and in April 1978 it was started the assembly of furnaces, of the plant. Apart from that, everything was sand, the land consolidations were made, those 37 hectares of land from sea had been recovered and they had started to build the foundations in the area of the delayed coker, DGRS and spheres plants, which were located on the former territory of Black Sea. We had no administrative pavilions, everybody stayed in barracks, in the area where the MTB plant is located at present, the site organization was there".
The refinery, verified with engines
But slowly, and with much inventiveness, the temerarious plants of the future Refinery were erected. Several months before the starting up of the first plant, it should have been verified, naturally.
“We needed steam, and CET Midia was not prepared to deliver us process steam. Therefore, 14 engines were brought, being stabled on the railway next to CET Midia. They worked with coal and generated steam, which was captured, introduced in pipes and we used it to perform the first preparing operations to start up the plant, in the spring of the year 1979. The process was called the gunite drying to those two furnaces of DA plant", Alexandru Nicolcioiu details.
One by one, all hydraulic tests were performed, all equipment and machinery without which the introduction of the raw material and the production could not be started, were certified at ISCIR. And that moment could not be postponed, since – people aged more than 45 years perhaps remember – at that time “the beloved leader" had a single ambition: to pay the national debt, and therefore, the industry should boom.
“The crude oil was received from the Constanţa company, named CHIMPEX, which is named Oli Terminal at present. The crude oil was pumped by pipelines and the first day when the atmospheric distillation unit was effectively started up, was 29 June 1979, when, together with the then co-workers – some of them are also working on the platform at present – we brought the unit to adequate parameters. At that time, I was the correspondent of the current head of unit, however, at that time, the position was called shop foreman. In addition, because I had two and a half year work experience from Piteşti, I also formed part of the team of coordinating and starting up this plant. Certainly, with people having more work experience and seniority than I do. Moreover, with oilmen coming from other refineries operating at that time, from Borzeşti, from Piteşti, from Brazi, who were those from the technical assistance department", Nicolcioiu recalls the historical event.
Success experienced at the age of 25
That was a moment of triumph and of victory and, even if the respective period was, as some people say “of bad old days” for Romania, in general, things “felt differently” at Petromidia. Although they were required to comply with “the working hours” and to strictly observe the execution deadlines, refiners achieved one success after another. And in their world, each victory is something real, concrete.
“I was 25 years old and I was not feeling any pressure at that age, just as at the present time! It is a very beautiful job and we were very glad that we had begun, we had started up the works. We were so happy when the first quantity of gasoline, the first quantity of diesel fuel, the first quantity of heating oil were discharged from the installation. Everyone was happy, as that was a complete success of the employees during that period on the respective platform. Everyone’s success, not only that of employees belonging to the respective section. The entire team took credit for that", Alexandru Nicolcioiu says showing a great deal of modesty.
The refinery was commissioned by starting up each plant
The compliance with the “working plan" was a strict requirement, and the plants were started up – just like a Swiss watch – one after another.
“That was very important, since we had an intensive schedule to put into service the respective plants, from the atmospheric distillation plant, which was the first plant on the technological process flow, until the start up of the other plants within the Refinery, and, in addition, the petrochemistry related units. We were defined during the respective period as 23 plants on the entire platform. The DA plant was started up in 1979, and during the period 1981-1982 the catalytic reformer units and the aromatic platform were started up, and in 1984 the catalytic cracking unit was put into operation, in 1985 the delayed coker and the paraxylene units were put into operation and in the petrochemistry field, the dimethylterephthalate production unit was started up – which represented the raw material for the synthetic yarns and fibres industry. During the years 87-88 and 89 the pyrolysis, polyethylene, polypropylene plants and the ethylene oxide plant were put into operation", Alexandru Nicolcioiu asserts without hesitation, as if he was thumbing in mind through the history book of Petromidia.
In 10 years, actually all plants were started up, each of them being out into operation upon its completion. There was no hurry and they had followed a better idea: that Petromidia actually became productive from the time when the first plant was completed, and that they didn’t need to wait for the completion of the entire construction.
“As Romania owed several refineries during that time, the products which we obtained in Midia, not being finished, the respective product went to other refineries as a semi-finished product, in Piteşti, Brazi, to Oneşti or for export. All processing industry in Romania was designed a large national refinery, composed of 10 refineries. Certainly, each refinery, in turn, was a separated legal entity, however, it was part of an integrated system of a large refinery with a processing capacity of 32 million tons of crude oil per year, composed of refineries located in the area of Constanţa, Ploieşti, Piteşti, Oneşti, Braşov", my interlocutor describes the whole landscape.
Refiners, a more special family
Although the new Năvodari Petrochemical Plant, which was the last plant built in Romania, was the most modern, the other refineries did not feel at all “threatened” by their younger brother. And not even refiners did not have any reason to feel jealous. “We had even developed a very close cooperation relationship with the others. In Romania, the faculty that I graduated had only 45 Romanian students per year and also, 45 foreign students. So, we knew each other very well, we used to cooperate very well. Actually, each of us used to choose a job by assignment, but we have always helped each other. (...) Since we were very few in number, as oilmen, we actually acted as a family”, Alexandru Nicolcioiu emphasizes.
He had college friends from many world countries. At that time, and also for many years after the Revolution, Romania was a real power in the crude oil extracting and processing technology.
“The diploma is internationally recognized and I had also foreign college friends from Cuba, from Vietnam, from Venezuela, from Egypt, I had even had college friends from Nigeria. Generally, from countries being large oil-producers during that period, with which Romania had concluded international agreements for staff training and for building refineries. The Romanian companies built plants in the countries about which I was talking earlier", the former general manager of Petromidia says, with obvious national pride.
The first steps in democracy and the dawn of the Dark time
After the Revolution, things have changed almost instantly, and, knowing what he knows now, Alexandru Nicolcioiu has noticed the first signs of a Dark time that was to come. In the recently installed democracy, the State could not be anymore the supreme master, and the first two years following the Revolution represented the fragmentation of the “large national refinery”.
“After 1989, it was adopted the State ownership - according to Law no. 31 - economy was divided in two ways: autonomous administration companies were established, which were fully owned by the State and which were considered as strategic companies of national interest, and business companies. In our crude oil processing system, the upstream division was established in Petrom Autonomous Administration Company. As upstream meant the crude oil of exploration, extraction, delivery, everything represented Petrom Autonomous Administration Company. And those 10 refineries changed into companies, where the State Ownership Fund (FPS, n.r.) owned 70%, and the Private Ownership Fund (FPP, n.r.) owned 30%. And during that period, there were those shareholder vouchers, each of them amounting to lei 25, that the Romanian citizens received in different companies", he says.
Less money for crude oil
There was a time in which the financing sources for oil import were decreased, and exports also decreased, agreements were cancelled one by one. Among the relationships that the Socialist Romania had developed with many different countries, some important relationships ceased. “The State, slowly, retired from financing the crude oil purchases. Therefore, each company had to outline its main strategy, which we, as a company, were going to have.
At that time, Alexandru Nicolcioiu had taken over the management of Petromidia. If in 1979, when the first plant had been put into operation he had been a workshop foreman, in 1984 he had already been advanced to the position of refinery manager, “in 1990 I was appointed the general manager of Petromidia SA and the chairman of the Board of Directors, and from 1990 until 2016, besides other positions which I had held, I was also the chairman of the Board of Directors, with a two-year interruption period, between 1999 and 2000".
Returning to the first years after the Revolution, another moment deserves to be marked, he says. The fact that in the early 2000’s, the destiny of Midia-Năvodari Petrochemical Plant included also that of Vega refinery, its younger sister, but the “elder” in Ploieşti, which, this year, on 18 November, will celebrate 114 years of operation. Left entirely to their own possibilities, in a new business environment for the Romanian people, the Romanian refineries found themselves courted by foreign investors. Finally, it seemed that “the Americans are coming”, those proverbially expected since the time of the Second World War. Although relatively recently opened, the Năvodari refinery faced some problems.
The first revamping
“Midia, during that period, as it was a recently built refinery, benefited also from certain modern technologies. (...) In 1990, various investors came and there were submitted certain financing proposals. In February 1990, together with the ministry and the then Government, we were aware of the fact that we needed a capital injection in order to be able to upgrade the technological installations at the points where, over ten years, we found that we had a lot of flaws”, Alexandru Nicolcioiu says.
With the contribution of the Ministry of Industry and of the then Government, the former manager decided to take out a loan amounting to USD 50 million for the partial revamping of the refinery. This loan was guaranteed by the then Romanian Foreign Trade Bank, with the counter-guarantee of the National Bank, “in order to be able to have access to lei for the loan reimbursement. This loan had a very good interest rate, and with that amount of USD 50 million we succeeded in revamping a part of the refinery plants, the capacity of which was of 3.5 million tons per year. And we arrived at that stage in which, through the yields of white products which we obtained during the respective period, we became from the technical and operational point of view, one of the most modern Romanian refineries".
Really long-term strategies
Investments took place within the period 1991-1993, the loan agreement was signed on 13 December 1990 and they allowed Petromidia to become, from the technological and operational point of view, a modern refinery. “The crude oil quantities processed during that time certainly weren’t those of the current time. Generally, we processed a quantity of 2.5 million tons of crude oil per year, within a so-called holding that the other refineries belonged to, which was called RAFIROM. The Romanian State, during that period, in order not to deprive refineries of its support, through the agency of FPS that owned 70%, established this holding, RAFIROM. (...) Various strategies were worked out during that period, a part thereof was implemented, the others, since they had no more financial support, were left uncompleted or were completed later. From the then point of view of Petromidia, our strategy was to develop our refinery as the most attractive from the operational point of view, to benefit from the existence of this site, and, slowly, it was proven that the investment made in the years 1991-1993 was successful”.
The dawn of the Dark time: price-fixing and low yield
During the same period, however, overall, “the large national refinery” actually reduced its yield capacity substantially. It was no longer processing a quantity of 32 million tons of crude oil per year, as in the year prior to Revolution. And refineries, some of which closing a part of their plants, came to be at a loss. “If within Arpechim Piteşti there were two processing lines which were processing 7 million, it was established that one of those lines be shut down, and within the other refineries the older plants were shut down and focused on the modules processing 3.5 million tons of crude oil. The most important issue during that period, for all refineries, not only for Midia, was that it depended on the crude oil imports and thus, the Romanian market of oil products was controlled in relation to prices, until 1998 when they were finally liberalized".
More specifically, the State, since it refused to increase the price for household customers, kept a very low sale price for gasoline and diesel fuel. It was a monopoly that would be extremely expensive for the Romanian refineries, some of which are closed and in disarray or “preservation” now. By a Government Decision, given maximum two times per year, the Government established the price, and the already private entities – refineries – were subjected thereto, because they had to.
“Actually, we bought crude oil at the market quotation, but the product delivery in the Romanian market was made at some pre-established prices. Of course, the financial influences resulting from this method of calculation were incurred by each refinery separately. This issue, and in addition, the devaluation of the dollar which had increased from lei 18 to lei 9,000 within the period 1996-1997, while we were still repaying the loan of USD 50 million, represented two major negative financial effects, for which cause the financial situation of all refineries had deteriorated. Even if from the operational point of view each of us gained operating revenues, the financial influences were swallowing all that profit and we were at a loss", Alexandru Nicolcioiu states.
Lottery of privatizations and the dawns of the Reinvention period
Some refineries managed to become private entities, others were subject to privatization and failed. “We, Petromidia, had several attempts of privatization. During that period, we still had certain agreements concluded with the Foreign Trade Company, during the period 1996 – 1997, in order to be able to provide the crude oil resource. We had access to some financing, but certainly that at the time when it was stated that it would be come up for privatization, both suppliers and banks were on standby until the new owner would be finally decided. And one of the darkest periods of Midia Petrochemical Plants was represented by the years 1999 – 2000, when during those two years only 1.9 million tons of crude oil were processed, as compared to 12 million tons in 2 years as we are processing today. However, at the end of this extremely difficult period, in October 2000, the privatization contract was concluded with Rompetrol, and it became effective in 2001", Alexandru Nicolcioiu says.
The period comprised between 1999 and 2000 was a difficult period for Petromidia employees. As they could see how other refineries were closed and all employees were dismissed, and their families actually went homeless, as they say. “However, they trusted us, the management of that time. We developed pretty coherent strategies that the investor examined and implemented. I mean, from the moment when the shares were sold, in both cases, from FSP to Rompetrol and subsequently from Rompetrol to KazMunayGaz, we had shaped the development strategies, and people trusted us that they would be implemented”.
It was the beginning of the Reinvention period of Petromidia. After it had been struggling for years alone, to stay on the line and not to close its doors, things gradually, but certainly changed. And this time, only in good.
“Of course, the period in which Rompetrol was the owner, after having purchased the shares from FSP, represented the period within which we managed to develop ourselves. We also made technological investments, as well as environment investments. The quantity of processed crude oil increased year after year. In 2007, Rompetrol sold all shares towards KazMunaiGaz company and I can say that this was the crucial moment that finalized and maintained the development trend of Midia refinery. The Kazakh company also owns crude oil resources, it has had funds available, and large and many investments were made on the Petromidia platform. It is about technological, logistic, environmental investments, as today we have access to Midia Port, having our own terminal. A terminal of 9 kilometers was built in the sea (Buoy – the terminal of discharging ships in the open sea, n.r.). All these give us full independence, with access to Midia Port, with access to the rail and car load structure, with access to Danube – Black Sea Canal".
Today, Petromidia is the absolute leader
The result? At present, Petromidia is operating in more than optimal conditions “being the main refinery in Romania and one of the most modern in the Central and Eastern Europe. Certainly, as we believed in the strategies which we had designed, being also pleased that they had been agreed by the purchaser, that everybody had got involved, so to speak, as they said some time - with “workers’ enthusiasm”, in their implementation and thus, we have managed today to have a production output increased from 3.5 million tons of crude oil per year, to 5.5 million tons of crude oil which may be processed per year, at the same time with the development of plants, such as that of hydrocracking, and so on", Alexandru Nicolcioiu says.
“As regards people, we have at present, in 2019, 55 employees with more than 40-year seniority, another 88 employees with more than 37-year seniority. Their total represents, nevertheless, 140 employees of those 1,500 working on the entire platform, namely 10%, who have remained here, by choice. In my opinion, no body left Midia angry. Where I meet former employees being retired at present, no one hates Petromidia".
Impact on local community
"In 1975, Năvodari town had 6,000 inhabitants. Most of them were fishermen and some of them were chemists. “It was called “city” as it had the Works of superphosphates and sulphuric acids built by Soviets and opened in 1958. But there were some blocks of flats, it was actually a small town of fishermen. With the building of these Works, the number of inhabitants of the town increased to 40,000 inhabitants in 1990".
This meant the building of whole neighborhoods, thousands of families of which at least one member works or worked within the refinery. However, as the refinery made investments in the environment, another highly profitable industry largely developed in the area, namely that of tourism.
“And today. Năvodari has as many inhabitants as in the year 1990, and the main means of support are Petromidia and the tourism. Having the environmental issues resolved – water, air, soil – by major investments in Petromidia, the tourism in the respective area has largely developed, as you can see yourself. They reached even the company fence!"
We draw the line and take stock
At the end of the 40-year period of operation of Petromidia, even if its mark is, as we showed, much more visible on this place – ”as it’s been 44 years since we actually began our activity here, I am also surprised how quickly they passed" – Alexandru Nicolcioiu has all reasons for being satisfied. The only “enemy” that we could not defeat is time. “It passes very quickly, you can’t just turn back time. Time is the worst enemy of this industry, if you want to call it that way, as all the time things have been improved in this industry, there’s talk of digitalization, there’s talk of super-automated, super-computerized systems, having an accelerated regime of development. And if you are not among the first to implement these new technologies, competition surpasses whistling".
The person who has managed the Refinery for tens of years says that crude oil does not have a dark future in such a false way that is presented by some persons, attempting to discourage young people. “I consider that crude oil will be for many centuries in the future one of the main bases of world development. Of course, not only gasoline and diesel oil are produced from crude oil. Plastics shall be manufactured thereof, the petrochemical industry, and bitumen shall be manufactured from crude oil, as well. Although cars will be electrical or will work with hydrogen or with any other type of power someday, they will circulate also in the street. The flying vehicles have not been yet invented. Bitumen is the basis on communal, town, national roads, on highways. And for us, Vega Refinery, since 2002, it has actually been a total synergy between the products that we manufacture and that are only capitalized at Vega, including on bitumen, of which we produce 100,000 – 110,000 tons per year. Crude oil won’t disappear, more and more deposits are discovered. Certainly, the exploitation costs are likely to increase, as they depend on the depth and place where they are found".
“I feel like a 35-year-old”
My interlocutor, who now is showing exactly the same energy which it proved at the beginning of the interview, says that, if he has to draw the line, he has achieved everything that he had intended to achieve when he took over the management of Petromidia, and even more.
“As an oilman, I feel like a 35-year-old person. I’m still in a mood for work, I still jaw my co-workers, giving them advice, and I am glad that they listen to me. I am very glad that the wishes I asserted for Petromidia during an interview in 1992, has come true. I asserted then that I would struggle to have access to the Danube-Black Sea Canal, a canal that a lot of people expressed their unhappiness for the manner in which it had been built. And having access to Midia Port, we also have access to the canal. I thought at that time that if we had around USD 200 million, we could become the best and the most profitable refinery. Certainly, there was much more money, but this has been achieved, as well. And, of course, I wished for us a strategic investor that could finance and provide crude oil in the Refinery. That was my strategy at that time, and yes, everything came true!"